This summary contains all material you need to know for the exam of SHRM. It consists of all lecture material and all articles you need to study, including useful pictures and graphs.
, WEEK 1
VIDEO LECTURE 1 – SHRM Fundamentals
1. What approach do we take to study SHRM?
We take an analytical approach to study HRM. What do managers do in HRM (description) & why do
they do what they do (explanations)? AA provides the basis for discussions of what managers are
ought to do (description).
Thus, empirical description & theoretical explanation come before policy prescription
2. What are human resources?
Human resources = characteristics that are intrinsic to human beings, which people can apply to the
various tasks and challenges of their lives. Characteristics are:
Knowledge, skills and abilities (KSAs)
Big five = physical health // emotional health // motivations // intellectual capabilities //
personalities
Individuals own human resources. Organizations are dependent on people who have the human
resources that they need to be successful HRM is an inevitable process in organizations.
3. What is human resource management (HRM)?
Human Resource Management = The process through which management attempts to build a
workforce with the kind of human resources their organization needs & create the kind of human
performances that will make it successful.
HRM is a management activity, to achieve organizational goals
Managers design HRM systems to be able to manage work & people.
What are HRM systems (HRM Models)?
HRM systems/models = bundles of HRM practises that managers use to design and manage work,
and to employ and manage people to employ the work.
1. HRM policies and practices for work management = Job design // Team design // Organizational
change
2. HRM policies and practices for people management = Workforce planning // Recruitment &
selection // Training & development // Performance management // Compensation incentives //
retention
4. Who are involved in HRM?
1. Senior management
Align HRM with organizational goals & strategy vertical fit
Align HRM with other functional areas M, P, F, horizontal fit
Align HR policies and practises with one another internal fit
Involve other stakeholders in HRM processes
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,2. Line management
Implement and use HRM practises to hire/develop/motivate/reward/retain employees
3. HR specialists
Support managers to align HRM with the overall business strategy
Design & Implement HR policies and practises
4. Employees
Develop perceptions of HRM policies and practises
Are involved in and use HRM practises
5. What roles do HR specialists fulfil?
Depends on two dimensions:
Strategic focus (future) vs Operational focus (day-to-day)
Processes focus vs People focus.
1. Strategic partner = Strategic & Processes focused. Align HR & Business strategy vertically,
horizontally and internally. Active role in setting strategic direction.
2. Change agent = Strategic & People focused. Managing transformation and change. Help line
managers to adapt to changing circumstances, communicate changes to employees, plan training
etc.
3. Administrative Expert = Operational & Processes focused. Managing the firms HR infrastructure.
Opt for process optimization & efficiency. Design HR practises, deliver HR instruments & services,
keep data, introduce HR systems etc.
4. Employee Champion = Operational & People focused. Managing employees’ contribution.
Protect the employees’ interest, crate a good environment and ensure that managers treat
employees fair.
6. What are the strategic goals of HRM?
Two sets of SHRM goals Economic and Socio-political goals.
A) Economic Goals
1. Cost-effective labor
HRM needs to secure economic viability of the firm – make a profit that is acceptable. Dual
concept make human resources productive at an affordable cost.
2. Organizational flexibility
HRM can create flexibility by short-run responsiveness or long-run agility.
I = Short-run responsiveness
o Numerical flexibility = use HR staffing practises that make it easier to hire/shed labor. E.g.
overtime // temporary or zero-hour contracts. Risk of fluctuations is on employee.
o Financial flexibility = use HR practises of mixed waged or performance-based bonuses
o Functional flexibility = hire people who are cross-trained or multiskilled. Maintain smaller
workforce but cope better with changing work demands requiring multiple skills.
II = Long-run agility
o Capacity to create endurable changes to cope with radically changing environments. E.g.
offshoring production facilities HRM model for dual workforce. However, long-run agility is
difficult to achieve due to established thoughts & routines that are hard to change.’
3. Human resource advantage
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, o Competitive advantage = Advantage over competitors gained by offering consumers greater
value. This can be done by lower prices (cost advantage) or greater benefits and services
(differentiation advantage). Most CA are temporary. Sustainable CA are most valuable. HRM
plays a crucial role in developing CA by HC & SC advantages.
o Human capital advantage = Attracting // developing // motivating // retaining more highly
employees than its rivals, better KSAs.
o Social capital advantage = Superior ways of combining the KSAs of individuals into collaborative
activities. This leads to CA and excellent organizational performance.
o Difference between elite & egalitarian models of HR advantage?
Elite HRA = invest in human & social capital of the elite. Employee operating workforce is
employed in cost-effective ways. Low-skilled products.
Egalitarian HRA = invest extensively in human & social capital of the entire workforce. Ensure
delivery of high-quality, high-priced products to customers. High-skilled products.
B) Socio-political Goals
1. Social legitimacy
Firms are not only economic but also social actors. Managers need to adapt HRM to legal
requirements, social values and norms.
a. Regulative pillar = labor laws & legal rules
b. Normative pillar = social values & norms
c. Cultural-cognitive pillar = how people think and behave in a society.
However, employers differ in social legitimacy goals:
o Avoid legal responsibilities (underpay, breach of health & safety)
o Legal compliance, adopt baseline legitimacy goal (to avoid prosecution & bad publicity)
o Actively promote equal employment opportunities (EEO) and work-life & family-friendly
employment conditions.
2. Managerial power
Managers use HRM to enhance power as STH, enabling them to provide leadership,
direction, and coordination. Power-seeking behaviour can become perverse.
Agency theory = managers are agents who can pursue short-term interest at expense of
firm’s long-term interest. E.g. bonus pay out to banking executives. & trend to
financialization (short-term pay-for-performance-schemes). Causes ratio between CEO and
worker pay to rise.
7. What is strategic in HRM?
Organizational strategy = making the distinction between strategic problems the firms encounter in
their environment and the strategies their managers adopt to address them.
Fundamental strategic problems are:
1. Economic viability
o Identify a market opportunity & establish a viable strategy to meet it
o Establish the minimum set of capabilities to participate in the industry table stakes.
Table stakes are about the basis business needs. Marketing (target customer needs) //
Funding (finance to make investments) // Production (deliver promised value) and HRM
(employment of capable, motivated and affordable people).
2. Developing competitive advantage
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